Somalia Currency Exchange Project

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The currency exchange is envisaged as a project with a scope that combines traditional exchange of banknotes with several legal andstructural reforms involving banking, digital financial inclusion and payment systems. Support will be provided to the FGS towardsimplementation of four components:Componet 1 – Currency design and planning of implementation activities: The CBS will issuebanknotes with low denominations and appropriate security features, namely SOS 1,000, SOS 2,000, SOS 5,000, and SOS 10,000. The CBShas already began to work on the design of the new currency and has completed the currency specifications including size, securityfeatures, and other specifications. The new series of banknotes will have much improved security features compared to the seriesfrom 1983–90 and will be difficult and time-consuming to copy by both traditional and computer-based printing methods. Typically,local counterfeiters do not exhibit sophisticated techniques and use crude in-house techniques. At this stage, the project willfund planning activities by the CBS, including development of a clear logistics and communication plan. Component 2 – Currencyexchange implementation: Through this component the CBS will implement all currency exchange activities. Printing of banknotes willbe procured internationally through a competitive tendering process. There are several specialized currency printing firms withfacilities in the U.K., US, Germany, Switzerland and Russia that would be eligible to bid for this project. Delivery of thebanknotes will be done by the vendor(s) via air or ship to Mogadishu, upon clearance by the CBS/Currency Management Unit.Transportation from the harbor/airport to this facility would be arranged with Somali security and AMISOM forces. In addition, thecommunication consultant hired under the project will execute all communication activities by coordinating with key stakeholders.The new banknotes will be distributed through MTBs and the process is expected to not to exceed 90-100 days. Component 3 –Ongoing technical assistance: Subject to securing adequate funding, the project will finance TA to the CBS to ensure sustainabilityof the project. The CBS organizational reform and governance (including having a well-functioning currency management unit) andstronger financial sector regulations (including mobile money operators) will be needed to ensure that new national currency can bemanaged appropriately and achieve the development objectives of ‘a sound and stable legal tender national currency’. The projectdesign will also incorporate an aspect of riding on the currency exchange operation to promote opening of bank and mobile moneyaccounts at the currency exchange points.Component 4 – Financial management, and monitoring and evaluation: This component wouldfinance all the costs pertaining the Project Implementation Unit (PIU) within implementing entity; financial management, andmonitoring and evaluation (M&E).